May 2018, John purchased two hectares of land for $250,000 on which he planned to build a block of units butunfortunately he ran into financial difficulty. On 1 July 2020 he subdivided the land into two blocks and on 2 June 2021 hesold one block for $160,000 with settlement taking place on 5 July 2021. The market value of the remaining block was$240,000. The associated costs were as follows:Stamp duty on purchaseLegal fees on purchaseSubdivision costsLegal fees on saleCommission on sale$7,200$1,400$15,000$1,600$6,300RequiredWith reference to relevant legal authority, calculate any capital gain or loss on sale of the block to John in the year ended 30June 2021?

Capital gain is defined as rise in the asset value of the capital as well as it is recognized when…

Answered: planned to build a block of units…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 43P

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